A Trust Company Pays 3

question 284

Short Answer

A trust company pays 3.5% compounded semiannually on its three-year GICs. For you to prefer an annually compounded GIC of the same maturity, what value must its nominal interest rate exceed?

---

Definitions:

Corporate Objectives

The defined goals and intentions of a corporation, aimed at guiding its overall direction and strategy for achieving success and growth.

Internal Customers

Individuals or departments within an organization that receive products or services from other parts of the company.

Inter-Divisional Transfer Price

The price charged for goods or services exchanged between divisions of the same company.

Divisional Autonomy

The degree of independence granted to separate divisions within a company, allowing them to make decisions without central approval.